Author: Robin Clark Eilenberg

The State Pension System’s fiscal year 2018 returns were higher than the assumed rate of return, and its overall funding ratio continues to improve.

The Maryland State Pension System has beat its goal for investment returns, earning 8.06% against a 7.50% target, according to a press release from the State Pension System. The System also continues to shrink its unfunded liability, counter to a national trend in the opposite direction.

According to the Maryland State Retirement Agency, the System has earned an average of 8.07% since 1986. And, while the System is not yet fully-funded, positive returns like this year’s help reduce its unfunded liability.

Through a combination of investment performance improvements, and benefit reforms made over several years, the System’s health is improving. From the State Pension System Press Release:

“Investment returns this past year are consistent with the long term expectations for our diversified asset allocation and the Board is pleased that, as a result of its oversight and the diligent work of the System’s Investment Division, this asset growth helps to ensure the sustainability of our Plan.” – State Treasurer Nancy K. Kopp, Chair of the Maryland State Retirement and Pension System Board of Trustees.

About half of Maryland counties participate in the State pension system to provide pensions to county government employees. As members of the System, those counties have a particular interest in the System’s investment returns.

In Maryland, the General Assembly has also acted to reduce the Pension System’s unfunded liability through benefit reforms. Reforms enacted by the Legislature in 2011 continue to show positive results:

Contribution rates are lower for the coming fiscal year (17.42%) than had been projected (18.70%) in the June 30, 2010 valuation, and the Maryland Pension System’s funded ratio (71.8%) is higher than had been projected (64.5%) at that time

The System is on track to be:

80% funded by 2026, and

100% funded by 2039

This positive progress is the inverse of an identified national trend in pensions, as the funding ratios of many public pensions have recently declined. Maryland has made progress surmounting the hurdles experienced by public pensions across the country, including a growing number of retirees, and reduced anticipated investment returns. The increase in Maryland’s Pension funding level is largely due to benefit reforms enacted by the General Assembly, including more restrictive criteria for cost-of-living increases.

The ability of county governments and many municipalities to participate in the State Pension System allows them to provide a certain level of benefit to their employees that might not be otherwise sustainable. MACo will continue to track the System’s progress toward its goal of 100% funded status on behalf of county stakeholders.

The Chair of the Maryland State Retirement and Pension System Board of Trustees, Treasurer Nancy Kopp, will be speaking at this year’s MACo Conference. The Treasurer will be a special guest at the Women of MACo Lunch, on Friday, August 17, 2018.

Several branches of the Maryland Military Department are working together on cybersecurity simulators and demonstrations to improve the security of critical infrastructure.

The Maryland Military Department’s work on cyber issues is a partnership between representatives of the MD Air National Guard and the Maryland Defense Force. Together, these divisions have developed simulations of SCADA systems under cyber attack. SCADA systems may be used in critical infrastructure, such as water systems and 9-1-1 Call Centers.

Click for video coverage from WBALTV

As reported by WBAL TV, Maryland’s Air National Guard’s cyber capabilities are growing:

Two new Air National Guard units have been activated in Maryland. At full strength, the units will employ more than 300 full-time and traditional airmen, focusing on federal and state missions. The Maryland Air National Guard’s new 175th Cyber Operations Group is one of only two Cyber Operations Groups in the Air National Guard.

Daniel Molina, Commander, 275th Operations Support Squadron, and Colin Patrick, Branch Chief, Information Systems are both members of the cyber project and also handle cyber-related duties for their respective divisions.

Lt Col Molina’s squadron is part of the 175th Cyberspace Operations Group, 175th Wing in Baltimore Maryland. He is responsible for synchronizing operations and preparing combat- ready cyberspace forces to conduct global operations in support of Air Force, Joint Task Forces, and Combatant Commands.

Colin Patrick, Branch Chief, Information Systems is part of the Maryland Defense Force. First Lieutenant Colin Patrick is responsible for network engineering, help desk management and voice-over-IP systems at Maryland Defense Force Headquarters. Currently, Lieutenant Patrick is a Senior Network Engineer for the Defense Information Systems Agency in the Mobility division, which provides smartphones capable of operating on government networks at multiple security levels.

For more information, join us for the MACo Summer Conference Session, All Hands On Deck: Cybersecurity for County Governments. In this session, speakers will share a demonstration of what happens during a cyber-attack and provide advice for counties on securing personal information and critical infrastructure including public water and wastewater systems, transportation, and energy systems.

Cybersecurity solutions protect critical county infrastructure, including water systems.

County governments are responsible for numerous public services, many of them increasingly dependent on systems vulnerable to cyber attack.

Now an Israeli start-up focused on industrial cybersecurity could help your county safeguard water systems that your residents rely on.

Cybersecurity Start-up VP TJ Roe will be speaking at MACo’s Tech Expo on August 15.

At this year’s MACo Summer Conference Tech Expo, hear from TJ Roe, VP Sales North America of Radiflow Ltd., a Tel Aviv-based industrial cybersecurity company that closed an $18 million investment round, as reported by CTech.

From the article:

Founded in 2010, Radiflow pivoted from developing industry communication solutions to industrial cybersecurity in 2013, CEO Ilan Barda told Calcalist. The company now offers cybersecurity services designed to support critical infrastructure and industrial networks such as electricity and water providers, and reports more than 50 customers, primarily in the U.S. and Europe. The company is headquartered in Tel Aviv and operates another office in the U.S. It employs 35 people.

At MACo’s Summer Conference, TJ Roe of Radiflow, will join panelists from the Center for Internet Security and Maryland’s Military Department to discuss solutions for county governments seeking to assess threats and protect against them.

All Hands On Deck: Cybersecurity for County Governments

Wednesday, August 15, 12:45 – 1:45 PM

Roland E Powell Convention Center

Ocean City, Maryland

County government networks possess a wealth of valuable personal information, including Social Security numbers, tax ID numbers, health information, and other sensitive data. Counties also manage critical infrastructure, including 9-1-1 Call Centers, water, and waste water systems. Learn from leading cybersecurity experts how counties can work together to keep fast all data, and protect against cyber-attacks on systems integral to the health and safety of all residents.

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The Interagency Commission on School Construction, created by law this year, will have enhanced powers with regard to the State’s capital funding for K-12 school building projects.

The 21st Century School Facilities Act of 2018 contained many provisions relating to specific elements of the State’s school construction program, and dealt with topics including energy efficiency, alternative financing, and prevailing wage laws.

It also contained language that re-ordered the State’s own structure for distributing its $300+ million annual appropriation for local K-12 construction projects. This controversial element of the legislation, which became law through a legislative override of the Governor’s veto, created a new body call the Interagency Commission on School Construction.

The Commission includes several appointees from the General Assembly and the Governor’s Office, and, much like its predecessor, the Interagency Committee on School Construction, it includes members of the Governor’s Administration including representatives of the Departments of Planning and General Services.

The Commission will have enhanced responsibility for school construction funding, as compared with the Committee that preceded it. The Interagency Commission is an independent commission that functions within the Department of Education. The Commission’s purpose is to develop and approves policies, procedures, and regulations on state school construction allocations to local jurisdictions in an independent and merit-based manner. For more information, see the legislation that created the Commission.

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The Pew Charitable Trusts have released a report recommending public pensions conduct tests to anticipate their viability during market downturns on a regular basis.

The Pew Charitable Trusts analyzed 10 state pension systems (Maryland’s pension system was not one of the systems studied) and developed a set of broadly applicable recommendations for public pensions systems and their ability to survive economic volatility.

About half of Maryland’s counties participate in the State’s pension system, and all counties make payments toward the State’s teacher pension system as part of their support for the State’s local school boards.

The Pew Charitable Trusts study outlines warning signs for public pensions, and recommends certain funding structures, based on examples, to help improve public pension resiliency.

From Pew:

Uncertainty over long-term economic growth and the fragile nature of public pension funding demand policy solutions that manage volatility and lower state costs. The problem is only going to worsen as more members of the baby boom generation retire and pension money is paid out of state treasuries faster than it is coming in. Stress testing gives policymakers a clearer sense of how future economic downturns could affect pension finances, critical insight when setting policies that protect taxpayers and retirees.

A Work Group reviews the types and applications of UAS (commonly called drones) in Maryland while considering any needed changes to State law for the technology and its use by members of the public.

The Unmanned Aerial Systems Work Group met this week at the Maryland Coordination and Analysis Center, hearing two presentations. The first presentation was from Rodney Likin, Special Operations with the Maryland Department of Public Safety and Correctional Services. Rodney shared a detailed and gripping account of the interception of a plat to fly contraband into a maximum security prison in Western Maryland via drone.

This large unmanned aerial system (UAS) can fly at speeds of up to 80 mph.

The second presentation was by Detective Charles Russell, Prince George’s County Police Department, who showed and described to the UAS Work Group a range of unmanned aerial systems (commonly called drones) and their capabilities.

The UAS Work Group saw UAS of various shapes, sizes, and capabilities at its recent meeting.

The Work Group, which includes MACo and county representation, must produce a report for the Governor and General Assembly on revisions to law needed to confront expanding use of UAS.

At this meeting and in previous meetings, the Work Group discussed:

Law Enforcement education needed to help in identifying and reporting incidents of misuse of unmanned aerial systems (UAS)

State and local coordination with the FAA and the limitations of federal and state enforcement capabilities

Whether there may be changes needed to definitions of trespass or nuisance to accommodate UAS

Whether there may be a need to protect those who stop UAS intruding on their property from liability for costs of damages to the UAS

Whether to change definitions of critical infrastructure in State code, and consider the applicability of FAA regulations to all critical infrastructure in Maryland, and to maintain local authority over the definition of critical infrastructure.

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County governments, infrastructure suppliers, and wireless services providers are all putting forth representatives for MACo’s Summer Conference Session on small cell technology.

The Maryland Association of Counties Summer Conference will feature a session on small cell technology. This is in some ways a continuation of the conversations that were started at MACo’s Symposium on Small Cells held this spring.

In this session, wireless services providers will have a chance to share their perspective on the importance of small cells to Maryland, while attorneys from two of the jurisdictions out in front of this issue will share their lessons learned regarding the county role in small cell approvals and implementation.

County representatives discuss federal timelines and shot clocks for small cells that counties must meet at MACo’s Spring Symposium, The Big Picture on Small Cells. The conversation on small cells will continue at the MACo Summer Conference.

Surf’s Up! Small Cell Tsunami

The hanging of small cells on new and existing poles affects a range of issues, including business development, rural connectivity, and health concerns. Several counties have already dipped a toe in the water, negotiating directly with providers on zoning and licensing. Hear about 5G technology and what it could mean for Maryland, learn more about the necessary county role, and see a small cell up close at this educational session.

The House of Representatives has passed the Unfunded Mandates Information and Transparency Act (UMITA), but the Senate has yet to act. The National Association of Counties supports the legislation.

The National Association of Counties is urging US Senate action on legislation recently passed by the US House of Representatives that would increase transparency on federal unfunded mandates and their effect on State and County governments.

From NACo:

UMITA sets a variety of guidelines to further require federal agencies to analyze the effects of federal regulations on state and local governments. First, it would set specific standards for federal agency consultation with state and local governments when that agency is considering a new rule or regulation. UMITA would also require federal agencies to include consultation activities with state and local governments in annual compliance statements. Additionally, it allows the chair or ranking member of any standing or select congressional committee leadership to request a “lookback” of regulations to evaluate the financial impact of federal regulations.

According to NACo, the U.S. Senate has not taken up the companion version of the UMITA bill. NACo encourages counties to ask their senators to support this legislation or similar bills.

The MACo Summer Conference will feature a federal policy update from Maryland’s US Senator Ben Cardin on Friday, August 17, 2018; 10:30 am – 11:30 am. In a town hall setting, Senator Cardin will give an update on legislation in the 115th Congress and speak with county elected officials about their top priorities.

Senator Cardin was first elected to the U.S. Senate in 2006. He is a senior member of the Environment & Public Works Committee and Small Business & Entrepreneurship Committee and serves on the Senate Finance Committee.

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An infrastructure firm releases a report showing small cell technology and describing how small cells can support neighborhood revival based on their use in Baltimore City.

Crown Castle is an infrastructure provider for small cell technology offered by wireless technology companies, such as AT&T, T-Mobile, Sprint, and Verizon. Baltimore City is ahead of other jurisdictions in Maryland implementing small cell technology.

A small cell installed in Baltimore City, as portrayed in the case study released by Crown Castle.

As described in a recent report by Crown Castle on the Baltimore City experience with small cells, Crown sought to improve coverage and wireless connectivity in theCity:

The economic heartbeat of Maryland, Baltimore is quickly becoming known as a tourist destination that has largely shifted to a new age economy focused on service-oriented industries, such as education, retail, and entertainment. This has caused demand for mobile data to grow exponentially in Baltimore—making faster, more reliable wireless connectivity an essential utility for the city. Crown Castle was brought in to find an infrastructure solution that would bring much-needed coverage and capacity improvements to Baltimore’s wireless ecosystem.

Description: The hanging of small cells on new and existing poles affects a range of issues, including business development, rural connectivity, and health concerns. Several counties have already dipped a toe in the water, negotiating directly with providers on zoning and licensing. Hear about 5G technology and what it could mean for Maryland, learn more about the necessary county role, and see a small cell up close at this educational session.

Investors may reserve shares now for a program to receive 55% of their investment back immediately, thanks to State and Montgomery County biotechnology investment incentive tax credits.

The State of Maryland and county governments seek to build on Maryland’s strength in the biotech field for economic development and stability in the tax base.

One county has created a special tax credit program that combines with the Maryland’s Biotechnology Investment Incentive Tax Credit (BIITC) to provide refunds of 55% to investors funding Qualified Maryland Biotech Companies. The BIITC program, as described by the Department of Commerce, supports investment in seed and early stage biotech companies to promote and grow the biotech industry in Maryland.

As described by Montgomery County,

Montgomery County Biotechnology Investor Incentive Program, a supplemental grant available to investors in biotechnology companies located in the county. Automatically given to investors who receive the MD State tax credit.

Also, according to the Department of Commerce:

. . . [I]f a Qualified Maryland Biotech Company is located in Allegany, Dorchester, Garrett or Somerset Counties, 75% of the investment is eligible for the tax credit up to $500,000.​

20/20 Gene Systems, an early stage cancer detection company, seeks support to build its company through Maryland and County-based tax credit investor programs.

The investment opportunity offered recently by GeneSystems, an early stage cancer detection company, is an example of a business seeking to take advantage of the tax incentive program to grow its company in Maryland.

From 20/20 Gene Systems:

Receive a 55% Refund on Investments of $50k or More in 20/20 GeneSystemsWe’re excited to announce a compelling investment incentive available for investors in cancer detection startup 20/20 GeneSystems. Maryland’s Biotechnology Investment Incentive Tax Credit (BIITC) provides investors with refunds equal to 50% (plus 5% from Montgomery County, MD) of an eligible investment in 20/20 GeneSystems. The program supports investments in seed and early-stage biotech companies to promote and grow the biotech industry in Maryland.

The Maryland Association of Counties conference will feature a session on biotech business and the types of employment that the biotech field may bring to your county:

Anchor Your Local Economy with Biotech

The industry of biotechnology can help shore up a county’s economic development, creating health and wealth for local communities. Biotech, or the use of biological processes for industrial purposes (including the production of antibiotics and other disease-fighting medicines), may directly address health issues faced by your residents. At the same time, this emerging industry can create career-track job opportunities that set young professionals on a course to settle down in your county. In this session, hear about new developments in Maryland’s biotech community, including advancements that set Maryland upwind of other states in the biotech race. Learn how your county can attract biotech businesses and take advantage of the statewide biotech berth.